NEW YORK – Every day this week arrived with more evidence that energy usage is unlikely to bounce back soon, yet some experts believe oil prices may already have struck bottom.
The U.S. unemployment rate jumped to its highest level in 26 years. Home sales sunk to a new low. American International Group Inc. and General Motors Inc. continued to burn through cash despite receiving billions in federal loans.
Still brokers and traders seemed to ignore the daily doses of bad financial news. Benchmark crude closed above $40 every day of the week for the first time in a month
Light, sweet crude for April delivery rose $1.91 to settle at $45.52 Friday on the New York Mercantile Exchange. It was the second time crude settled above $45 in one week, which hasn’t happened since the first week of the year.
In London, Brent prices rose $1.21 to settle at $44.85 on the ICE Futures exchange.
Analysts say traders have mostly factored the doom and gloom into crude prices already, and focused instead on another key statistic this week: U.S. crude inventories dropped unexpectedly after swelling for months with cheap oil.
Deutsche bank said Friday that oil demand in coming months will be even lower than the most pessimistic estimates, but that OPEC cuts have finally begun to take hold.
The federal government said crude stocks fell by 700,000 barrels for the week ended Feb. 27, and analysts believe OPEC will call for more production cuts at its meeting on March 15.
“OPEC seems to have its act together,” said Michael Lynch, president of Strategic Energy and Economic Research. “They’re bringing inventories down, and that’s putting a floor on the market.”
Traders previously shrugged off OPEC supply cuts as the global recession and plummeting demand forced oil prices down from a high of more than $147 a barrel in July. But world supplies are again coming into focus months after the Organization of the Petroleum Exporting Countries began to turn off the spigots.